The Baltics: Continuing Boom or Bursting Bubble?

Since the late 1990s, the economies of Estonia, Latvia and Lithuania have experienced unprecedented economic growth, which has attracted a large number of foreign investors. American companies were among the first to seek business opportunities and have invested over $1 billion in the three countries as of 2008. However, the boom—partly financed on a loose credit policy—has recently created a fragile economic situation due to soaring wages, double-digit inflation, and high current account deficits. The resulting economic deceleration in the first half of 2008 has led analysts to comment that the “Baltic Bubble” is about to burst, potentially leading to a long-term recession. Other experts, nevertheless, maintain that the three countries are only experiencing a natural consolidation, which does not seriously endanger business opportunities in the long run. The purpose of this paper is to analyze the current condition of the Baltic economies and the environment for businesses there in order to determine if the three countries will still be attractive destinations for foreign direct investment (FDI) in the future.     

Doing business in Switzerland

Situated at the crossroads of Europe, Switzerland is an ideal example of a successful multicultural and multilingual society living in a harmonized way. This article provides a comprehensive review of Switzerland's historical development, political structure, economy, investment, and foreign trade environment. It aims at being a useful source of information for foreign businessmen and investors interested in doing business in Switzerland, one of the most advantageous business locations in Europe. © 2003 Wiley Periodicals, Inc.     

An investigative study of adult consumer education and lifelong learning needs in the United Kingdom and Latvia

Consumer education in Latvia is in the early stages of development and should be seen in the context of the rapidly changing society in the post‐Soviet era and the increasing influence of the marketplace, and Latvia's position as a new accession country. The Latvia University of Agriculture is in the process of developing an adult consumer education programme. A comparative study between the UK and Latvia was designed to test the hypothesis that many adult consumers lack knowledge and understanding of their consumer rights and responsibilities. A sample of adults in both countries completed a consumer rights questionnaire investigating attitude, knowledge and critical thinking ability. The UK questionnaire was modified, taking into account the different consumer environment in the two countries, to compare the need for adult consumer education in Latvia and the United Kingdom. In the United Kingdom results showed that the group overall were not confident that they knew enough about consumer rights and legislation or to resolve consumer problems and were unsure about their consumer responsibilities. Levels of knowledge were poor, leaving adults vulnerable to exploitation in the marketplace, uninformed about their responsibilities to voice dissatisfaction about goods and services, and unaware of how their consumer behaviour can affect the wider community. Adult participants in Latvia thought that they lacked education in consumer legal rights and responsibilities and did not have the necessary skills, knowledge and understanding to manage consumer problems effectively. Results in both countries indicate that adult consumer education is needed, supplemented by a comprehensive package of adult consumer education. Despite the cultural differences between the two countries, the analysis showed that similar adult consumer skills and attitudes were needed. This joint research has shown that this methodology could be used to determine adult consumer and life‐long consumer education needs in other European countries and internationally.     

Trends in international business thought and literature: Filling competence and skills gaps in management education and training in the baltic states

After a 50-year Soviet occupation, the three Baltic states, Estonia, Latvia, and Lithuania gained independence in the early 1990s (Nordberg, 1993: 27). The socialist planned economy left the Baltic countries' economies and industrial structures in a state of disarray. Industries developed during the Soviet occupation were, in fact, inefficient, old-fashioned, and too large in size for these small countries. The planned industrial and demand base was the Soviet Union. After independence, products could not be sold on Western markets without significant new Western investments (Nordberg, 1993: 37, 68-69, 110). The underdeveloped industrial sector and the centralized influence of the Gosplan-system had a significant detrimental influence on the management of the state-run companies. In the centrally planned system, the skills and competencies of management were not necessarily success factors; political priorities dominated. Large numbers of Russians were sent to all three Baltic states as workers, middle management, and as executives. In 1989 nearly 34 percent of the citizens of Latvia were of Russian origin, in Estonia the figure was 30 percent, and in Lithuania nearly 10 percent (Nordberg, 1993: 38). The companies in the Baltic states were seen as production units of a large centrally managed system. Marketing, sales, finance, and investment decisions were made in Moscow. Management training was production oriented. Most companies were primarily concerned with filling production quotas. With independence, everything changed. Markets, marketing, management, financing, and other normal business skills became essential for success. As privatization of state-owned industries commenced and Western competitors appeared on the market, the competence and skills gap of the Baltic executive became apparent to international partners as well as to Baltic national governments. © 1995 John Wiley & Sons, Inc.     

New Business Development and Industrial Marketing to Estonia-A Network Approach

Industrial co-operation and business-to-business marketing relationships form the core of economic activities that exist today between the Nordic countries and the newly independent Baltic states of Estonia, Lithuania and Latvia. The paper focuses on Finnish firms' business development in Estonian industrial markets. Through case studies the process of market penetration and market presence is empirically studied and analyzed from the Finnish counterparts' perspective. Theoretically and empirically the paper adopts a network view of business-to-business markets and marketing and in the analysis of the development of business relationships in this new market.     

Doing Business in India

On its independence in 1947, India was among the two most industrialized nations in Asia. Since then it adopted a “mixed economy” approach that hindered its national growth and the optimum utilization of its immense resources (both natural and human). To re‐establish itself as an economic force in the region, India liberalized its economy in early 1990s. The adoption of the “free market economy” model has created great opportunities for foreign businesses. This article provides useful information on the complex business environment, aimed to help foreign businessmen and investors to develop a good understanding on key background knowledge for being successful in India. It reviews Indian historical development, political structure and climate, international relations, and economy and foreign trade. India's infrastructure, legal framework, socio‐cultural set‐up, competitive environment, as well as market structure and potential are also analyzed. © 2001 John Wiley & Sons, Inc.     

Doing Business in Ukraine

Although it is the second largest country in Europe, Ukraine is still at an early stage in its transition to a market economy. Given its strong long‐term potential, it is a key country to monitor on the changing global landscape. This article provides a comprehensive review of Ukraine's historical development, political structure, economy, investment and foreign trade environment. It aims at being a useful source of information for foreign businessmen and investors interested in doing business in Ukraine. © 2000 John Wiley & Sons, Inc.     

Turkey

The Turkish Republic was founded in 1923, following the fall of the Ottoman Empire. Turkey is strategically positioned at the crossroads of Europe, the Black Sea region, and the Turkic‐speaking republics of Central Asia. It is also situated on the Mediterranean coast at close proximity to the Middle East, the Gulf States, and North Africa. It thus offers an excellent base for economic activities throughout the region. The country was a gateway from the ancient Silk Road to new markets and today is becoming a powerful focal point as a cultural and political intermediary as well as a regional trade center of growing importance. Turkey is the 17th largest economy in the world (Economist, 2003; World Bank, 2001). Turkish culture, history, and people have always fascinated scholars. In recent years, the country also has captured the attention of Western companies and investors. Once highly insular, the Turkish economy has been transformed over the past two decades into a vibrant liberal market within a rapidly modernizing society. It is regarded by the U.S. Department of Commerce as one of the top emerging markets. This article will explore the foundations of the Turkish economy, business system, and business culture from the perspective of foreign companies. Following a brief overview of the economy, the country's market potential is discussed. Next, entry strategies—including potential partnerships with indigenous firms—are recommended. Finally, we offer insights into the business culture, and provide tips for working effectively with Turkish business people. © 2003 Wiley Periodicals, Inc.     

Subnational managerial transformation and the post‐WTO‐accession business environment in China: Shanghai perspectives

The market‐oriented perspectives held by managers of China's municipal government agencies and urban enterprises constitute critical variables in the business environment encountered by foreign investors. A study of 426 predominantly subnational managers in Shanghai found most study participants generally positively inclined toward implementing accession‐related reforms and toward marketoriented developments. The study also revealed a surging interest in careers with foreign‐affiliated entities and widespread preference for incentives that give foreign‐invested firms a competitive hiring and retention advantage over domestic, especially state, establishments. The overall results suggest the transformation of subnational managerial orientations in a direction that is conducive for foreign participation in Shanghai's postaccession economy. © 2005 Wiley Periodicals, Inc.     

Consequences of European Union Enlargement for Spain

This article analyses the effects that EU Eastern enlargement will have on the Spanish economy. As opposed to the widespread belief that the major impact on Spain will stem from the reduction of Community funds received, the impact on two real variables is also analysed here, namely trade and foreign direct investment, and evidence is offered of the restructuring of economic activity in the enlarged Europe and its effects on the Spanish economy. In addition, the competition for Spain of the new partners in the Community market is also examined. One of the most noteworthy results is that the competition of the new members of the European market is becoming stronger, as they have a commercial structure that is becoming more and more similar to Spain's and with a greater technological content. This phenomenon appears to be the outcome of the activity of the multinationals, which are re‐organising their activity and transferring part of their production to Central Europe to capitalise on the cost advantages of the new members and their more strategic geographical situation. Furthermore, evidence is put forward that, if the criteria for eligibility for the Structural and Cohesion Funds are not altered, Spain will be one of the countries in which the budgetary situation will deteriorate most in the post‐enlargement EU.     

Interview with Jean‐Philippe Courtois,CEO, Microsoft EMEA

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software, services, and Internet technologies for personal and business computing. One of the most successful corporations in the world by any standard of measurement, Microsoft EMEA (Europe, Middle East, and Africa) is highly committed to a vast and particularly varied region, with more than 12,000 employees and over 60 local offices delivering products and services in 139 countries across the region. Gabriele Suder interviewed Jean‐Philippe Courtois, CEO of Microsoft EMEA and senior vice president in the Microsoft Corporation, about the company's case at the European Commission, and about the significance of the European business environment to international operations. © 2005 Wiley Periodicals, Inc.     

Foreign Direct Investment Policy–Friendly Business Environment in R&D Sectors: Baltic States versus Visegrad Countries

This article examines the impact of foreign direct investment (FDI) policy on inward FDI in the Visegrad and Baltic countries. The analysis of business environment highlights that the countries in both regions attempt to create a friendly business environment by means of similar methods. However, the countries in both regions focus on fiscal incentives such as taxes, which do not play a major role in attracting inward FDI in R&D. The results of attracting FDI are better in the Visegrad countries, which implement financial incentives toward inward FDI along with fiscal incentives. According to empirical analysis, it is noticed that a higher intervention level and a higher support level guarantee the volume of inward FDI. The country's introduced FDI policy enables it to orient industry and to implement economic strategic targets. FDI policy does have an impact on promoting the development of the entire country.     

Why on Earth Should Foreign Banks Invest in Africa's Financial Services Sector? Evidence from Financial Multinationals in Ghana

While sub‐Saharan African countries have been able to attract some degree of resource‐seeking foreign direct investment (FDI) due to their abundant natural resources, financial FDI inflows have proved to be elusive for the region, in spite of the widespread financial‐sector adjustment programs that offer attractive incentive packages for financial multinational corporations (MNCs). Literature surrounding the determinants of FDI inflows has mainly focused on manufacturing and real production activity. We analyzed the root causes of the weak administrative and institutional framework in Africa's banking industry, using Ghana as a case in point. Focusing on two financial MNCs as case studies, this article validates the significance of a thorough qualitative investigation in evaluating the explanations as to why most foreign banks do not invest in sub‐Saharan Africa and why the few that do have relatively insignificant operations. The study also reveals that despite the far‐reaching reforms, there are several structural constraints and deficiencies placed on financial MNCs that affect the size of the business they can conduct and their future investment decisions. One of the major issues prior to the financial‐sector reforms in Africa was disintegration, and the restructuring was not designed to create an attractive location for foreign capital; hence, the low financial FDI inflows to Ghana in particular and Africa in general. © 2015 Wiley Periodicals, Inc.     

A Relational Framework for Analyzing Ventures in Cognitive Environments: Illustrations from the TNK-BP Experience

This article looks at multinational investments in Central and Eastern Europe from a relational matrix perspective. The matrix posits a set of business relationships as outcomes of environment, regulatory or cognitive, and cluster valence combinations of power, urgency, and legitimacy. BP's pursuit of petroleum reserves leading to the venture with Russia's TNK is offered as a case study pointing to two general propositions relating the conduct of global firms in the region. Data analysis relating foreign direct investment with degrees of perceived corruption supports the propositions of opportunistic behavior and acceptance of opaque environments by global petroleum companies. The legitimacy construct is shown to be most prone to erosion, and its diminution impacts a firm's operating flexibility.     

Output Movements in East Asia: Is There a Regional Factor?

Using Lumsdaine and Prasad's (2003 ) methodology to construct a measure of the common component of industrial output fluctuations with time‐varying weights, this study finds that there is a significant regional factor that explains the movement in industrial production output across countries in East Asia (ASEAN 5 + 3). The cumulated common component for East Asia has very distinct peaks and troughs, with turning points occurring about every three years. Shocks in 2000–2001, coinciding with the bursting of the IT bubble, appear to be very important as there is a very large decline in the common component of industrial production output, larger than that experienced during the 1997 Asian Financial Crisis. Similar to McKinnon and Schnabl's (2003 ) findings, the Japanese economy is important for the region as its industrial production output cycle has the largest weight in the construction of the cumulated common component for the region and appears to be the most similar to it. Nevertheless, China's asymmetry with the cumulated component for the region appears to have been beneficial for the region, especially in the most recent period.     

The East Asian model and the Baltic states

The three Baltic states of Estonia, Latvia and Lithuania had higher national incomes than most of the other states of the USSR. The “Southeast Asian miracle” economies often did not reach comparable levels until the 1980s. Now that the Baltic states have regained independence, are there any lessons to be drawn from the experience of the “tigers”?     

Trends,economic policies and systemic changes in the three Baltic states

The almost total collapse of the old trade relationships with the other republics of the former Soviet Union has meant serious problems for the breakaway Baltic states of Estonia, Latvia and Lithuania. What progress have these countries been able to make so far on their way towards a market economy? Are the problems likely to get worse before they get better?     

The Great Recession of 2008: Impact on the Bangladeshi economy and international business implications

This article examines the current global financial crisis (GFC) and its impact on Bangladesh's economy and discusses international business implications for the country within an institution‐based analytical framework. The article finds that the macroeconomy of Bangladesh has shown remarkable resilience in the face of this massive global crisis, and the impact has been minimal and limited to a moderate slowdown of the economy The country thus could be poised for taking advantage of international business opportunities as the global economy begins to recover. Further, JPMorgan's Frontier Five and Goldman Sachs's Next Eleven classification of Bangladesh indicates enormous potential for growth and development. The article suggests that the Bangladeshi diaspora could serve as a connecting hub so that “brain gain” could be achieved through labor migration and remittances. Strategic alliances among home and foreign firms are also important to the future capacity building of the country. However, strategic management in the form of further institutional, structural, and policy reforms are critical in enabling the country to develop an international‐business‐friendly environment conducive to taking advantage of evolving global opportunities and realizing its full potential. © 2011 Wiley Periodicals, Inc.     

Enlargement and the European Geography of the Information Technology Sector

The information technology sector in Europe, comprising the production of computer hardware and software, is disproportionately located on the continent's western periphery. The vast bulk of computers sold in Europe in the 1990s were assembled either in Ireland or Scotland, while Ireland also accounted for over 40 per cent of all packaged software and 60 per cent of all business software sold in Europe. As the sector in both these locations is largely foreign owned, the question arises as to whether EU enlargement might impact on the geography of the sector by diverting information technology FDI from the western to the new eastern periphery. This issue is explored in the present paper by analysis of five individual sub‐segments: computer assembly and electronic components, R&D, mass‐market packaged software and the remainder of the software sector. The paper deems it likely that computer assembly operations will continue the shift seen in recent years from Ireland and Scotland to Central and Eastern Europe. The production of electronic components such as microchips represents a growing share of activity in most EU locations as well as in the CEE countries. Analysis suggests that this pattern of geographically‐dispersed growth will resume once the consequences of the collapse of the high‐tech bubble are played out. The distribution of R&D activity across Europe and globally is also considered unlikely to be much affected by enlargement. As for software, as long as localisation activities remain important, Ireland – the EU location in which most of this activity is carried out – seems set to be able to compete strongly, given the attractiveness of its English‐language environment and other attributes to the young continental Europeans upon which this activity relies. Most software services remain largely non‐tradable however. This sector will grow in the accession states as computer penetration rates converge on the EU average, but without displacing activity from the incumbent EU member states. For firms already competing in the tradable niche software segment, on the other hand, enlargement cannot but be beneficial because of its impact on the size of the market into which they sell.     

Introduction to the Special Issue: Management in Africa in the Global Context 1

ABSTRACT

The primary focus of this introductory article is to provide a synoptic peek into the challenges and opportunities facing the countries of Africa in today's global economy and in their attempts to develop their national economies to achieve what is commonly termed the Millennium Development Goals. While foreign direct investment (FDI) is seen as a way to attain these goals, FDI flows to African countries remain extremely low. If Africa is to attract diversified FDI inflows, not just those focused on extractive/natural resources, African countries need to develop a system of management that is effective and efficient, internationally oriented and nationally focused, culturally inclusive and institutionally supportive and reliable, and one that promotes business growth and economic development with a sense of social responsibility.